Lawyers for the Crown in New Zealand say the FBI did not break the law by taking evidence seized from Kim Dotcom's house back to the United States.
The German co-founder of the file-sharing site Megaupload is living in New Zealand where he has residency. He and three other men are facing extradition to the US on charges of internet piracy and money laundering in what is described as the largest criminal copyright case in the world.
Mr Dotcom and his co-accused have won the right to access the evidence that is in New Zealand, but the Crown has appealed against the ruling.
On Wednesday, Mr Dotcom's lawyers argued in the Auckland High Court that the material was removed without their knowledge and in breach of the Solicitor-General's ruling.
John Pike, the lawyer for the Attorney-General, said the Solicitor-General's ruling had not been breached because it only related to custody of the items, not copies.
However, Mr Pike admitted that the office thought the FBI agents were taking the copies back to the US with them, rather than sending them by courier while they were in New Zealand.
Mr Dotcom's lawyer, Willy Akel, told court it wants the Crown to begin copying all of the evidence in New Zealand, pending a court hearing on the appeal.
However, the Crown says copying all of the evidence would take at least two-and-a-half months and would have to be done by the FBI. It says the request is unrealistic and would almost certainly prevent the extradition hearing going ahead in August this year.
The court was told a police officer knew the FBI had couriered seven copies of electronic evidence from Mr Dotcom's house to the US, but did not report it.
Willy Akel said the FBI has taken 18 copies of evidence to the US illegally. He read out a statement by Detective Sergeant Nigel McMorrin, who looked after the FBI agents while they were in New Zealand, which he said showed that the defence could not have known the material was removed.
Outside court, the Crown refused to tell Radio New Zealand when it found out the material was removed, saying it was irrelevant because all parties knew the copies were being taken.
But Mr Dotcom's lawyers said items - and copies of them - are in essence the same thing, so believed they could not be taken offshore.
Justice Helen Winkelmann reserved her decision on Wednesday.
Megaupload was indicted in a federal court in Virginia on 19 January this year and the site was shut down. Mr Dotcom and his co-accused were arrested in Auckland, New Zealand, the following day. Formal papers requesting their extradition were lodged by the US in March.